Ethereum Layer 2 Tokens Gain Attention Ahead of Dencun Upgrade

Earlier today, Gnosis made an exciting announcement regarding the successful deployment of the Dencun upgrade on the Gnosis mainnet. The current market reflects this positive development, with Ether (ETH) valiantly maintaining its position above the $4,000 mark. The fervor surrounding the imminent Dencun upgrade has undoubtedly fueled this surge in Ether’s price, creating a palpable sense of anticipation in the crypto community.

Scheduled to go live on Wednesday, March 13th, the Dencun upgrade promises a significant transformation for Ethereum, adopting proto-dank sharding to enhance the network’s efficiency and security through scaling. As the upgrade looms, a notable uptick in interest is observable, particularly in Ethereum Layer 2 (L2) tokens.

Ethereum Layer 2 tokens, constructed atop the Ethereum blockchain yet processing transactions on a distinct layer, are now capturing the spotlight. Renowned crypto analyst Mike Deutscher has underscored the far-reaching impact expected from the Dencun upgrade, specifically emphasizing its potential to reduce fees on Ethereum Layer-2s by a noteworthy factor, estimated at least tenfold.

The Dencun upgrade has been activated on the @gnosischain mainnet!

🐡🦉🐡

Next ➡️ Ethereum Mainnet pic.twitter.com/S6GKhfe3TX

— Gnosis Chain 🦉 (@gnosischain) March 11, 2024

Anticipating the post-upgrade landscape, projections for gas fees on both ETH and L2s after EIP- 4844 have been outlined. The increased scalability brought by the Dencun upgrade is poised to benefit Layer 2 tokens, leading traders to strategically focus on these assets. Among them, lower market cap tokens such as Arbitrum (ARB), Optimism (OP), Lido DAO (LDO), and Metis (METIS) are catching the attention of traders who foresee potential gains in this evolving landscape.

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Source: Mike

It’s worth noting that the Dencun upgrade has already undergone successful implementation on various Ethereum testnets, paving the way for its mainnet debut later this week. This upgrade marks a pivotal moment in Ethereum’s evolution, following the Shanghai upgrade in April 2023, which empowered users to unstake their ETH from Ethereum’s beacon chain almost a year ago.